Michael Haylock, Patrick Kampkötter, Mario Macis, Robert Slonim, Daniel Wiesen, 02 July 2022

For patients suffering from leukaemia or other blood diseases, a hematopoietic stem cell transplant from a matching, unrelated donor offers the best chance of survival. But unlike other medical donations, a stem-cell donation is a multi-stage process that can take years to complete, and many donors fail to follow through on their initial commitment. This column investigates the impact of a German stem-cell donor registry initiative, and finds that an invitation to the initiative itself increased donors’ future availability, while participation had a direct and positive effect on donor readiness.

Marina Feliciano, Ethan Ilzetzki, Borui Niklas Zhu, 24 May 2022

The April 2022 CfM survey asked members of its European panel to assess the effects of an embargo on Russian gas on the German and EU economies. The majority of panellists assesses that an embargo on Russian gas would cut one to three percentage points from German GDP growth in 2022-3, if the German government offsets the costs with well-targeted fiscal policy. Estimates increase if the German government were to take no offsetting action. Additionally, a large majority thinks that the EU could weather such a ban with costs in the one to three percentage point range, even absent offsetting fiscal or monetary measures.

Alexander Donges, Jean-Marie Meier, Rui Silva, 20 May 2022

A large part of the world operates under oligarchic and authoritarian regimes, where access to economic opportunities is not offered to all citizens. This column discusses the impact of such ‘extractive institutions’ in stifling innovation and future economic growth. Using novel hand-collected data, it documents that ‘inclusive institutions’, which promote equal access to economic opportunities, are a first-order determinant of innovation. Geographical regions with more inclusive institutions are able to produce more than twice as much innovation (proxied with patents per capita) as regions with worse institutions.

Tilman Eichstädt, 26 April 2022

With the Donbas and towns in other regions of Ukraine rattled by the second phase of the Ukraine war, Germany and the rest of Europe are still struggling to find an effective response to the Russian aggression. This column uses negotiation analysis and non-cooperative game theory to argue that import taxes or tariffs can be a very effective way to influence the duration of the conflict. Implementing these in a clear step-by-step approach would increase the time pressure on Russia to end the war and raise the credibility of further actions.

Geghetsik Afunts, Misina Cato, Susanne Helmschrott, Tobias Schmidt, 20 April 2022

Russia’s invasion of Ukraine will likely pose new challenges to the global economic recovery by affecting energy prices and inflation rates. This column uses a quasi-experimental analysis to document the impact on inflation expectations of consumers in Germany. The authors find that both short-term and long-term inflation expectations increased as an immediate result of the invasion. This increase can partially be attributed to consumers’ fear of soaring energy prices.

Fabio Braggion, Felix von Meyerinck, Nic Schaub, 15 April 2022

Inflation has resurfaced following the COVID-19 pandemic and the war in Ukraine, leading to a lively discussion on how individual investors could protect the real value of their financial wealth against rising prices. This column uses a unique dataset to provide empirical evidence that individual investors in Germany in the 1920s bought less (sold more) stocks when facing higher local inflation. The effect was more pronounced for less sophisticated investors. The authors also find a positive relationship between local inflation and forgone returns following stock sales. These findings point to individual investors suffering from money illusion. 

Nicola Fuchs-Schündeln, 05 April 2022

On 7 April the 75th EP panel will discuss the long-term economic effects of lost learning due to Covid-19. What do we now know about the impact of closed schools, and what action policymakers can take to help this Covid generation make up for lost time?

For more about the upcoming panel meeting and to register for the online policy session visit: https://www.economic-policy.org/. 

Benjamin W. Arold, Ludger Woessmann, Larissa Zierow, 18 March 2022

Does compulsory religious education make us more likely to believe as adults, and does it make us more ethical? Ludger Woessmann, Larissa Zierow, and Benjamin Arold explain to Tim Phillips what educational reform in Germany can tell us.

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Economic Policy online panel discussion of a new research report by 
Nicola Fuchs-Schündeln
 

Covid, School Closures And Children’s Futures
Long-term distributional effects of lost learning in Germany and the US

Join us on 7 April at 17:15 (CET) for an Economic Policy panel discussion of a new research report by Nicola Fuchs-Schündeln.

As the Covid-19 pandemic swept across the world in the spring of 2020, schools were closed and millions of children faced major learning losses while their parents struggled to combine work, childcare and home education. A new study of the likely long-term impact of those closures on children’s future livelihoods and wellbeing will be launched at an online panel discussion hosted by Europe’s leading economic policy journal on Thursday 7 April 2022.

Nicola Fuchs-Schündeln of Goethe University Frankfurt and CEPR will present comparative empirical evidence on the considerable heterogeneity of school closures in Germany and the US – related to school type, pupil age and local income levels. She will examine likely variations in long-term effects across the income and wealth distribution. And she will consider policies that may address some of the educational damage to the most disadvantaged children from the missed opportunities caused by the pandemic and lockdowns.

Her presentation will be followed by a discussion with Andreas Schleicher and Monica Costa-Dias, moderated by Andrew Jack, Global Education Editor for the Financial Times.

Email [email protected] for further details and to request access to the press room. 

Benjamin W. Arold, Ludger Woessmann, Larissa Zierow, 03 March 2022

Compulsory religious education in school can have long-run consequences for students’ lives. Since the 1970s, German states at different times ended compulsory religious education in public schools and replaced it with a choice between ethics classes and religious education. This column shows that the reform not only led to reduced religiosity in students’ later life but also eroded traditional attitudes about gender roles and increased labour market participation and earnings.

Guido Alfani, Victoria Gierok, Felix Schaff, 28 January 2022

New evidence is transforming the way we look at long-term trends in economic inequality. This column reconstructs wealth inequality in the German area over five centuries. The significant declines in inequality triggered by the Black Death and again by the Thirty Years’ War of 1618–1648 and the plague that followed provide strong support for the potential levelling effects of catastrophes. However, the much lower mortality rate for Covid-19 suggests we can expect inequality to increase, not to decline, as a consequence of the pandemic.

Majed Dodin, Sebastian Findeisen, Lukas Henkel, Dominik Sachs, Paul Schüle, 24 December 2021

According to the OECD, social mobility in Germany is lower than in most other developed economies, reigniting a debate on equality of opportunity and shortcomings of the education system. This column discusses how census data can be used to obtain high quality mobility statistics for Germany. Using the Abitur educational qualification as a measure of opportunity, it suggests that relative mobility has remained constant for recent birth cohorts but points to substantial geographic variation in mobility measures across regions in the country.

Andreas Lichter, Max Löffler, Ingo E. Isphording, Thu-Van Nguyen, Felix Poege, Sebastian Siegloch, 21 December 2021

Studies have shown that targeted R&D tax incentives – such as tax credits for R&D spending – induce firms to conduct more R&D. However, little is known about the effects of general profit taxes on firm-level R&D spending and innovation output. This column presents evidence from Germany that points to sizeable negative effects of increasing profit taxes on firms’ R&D spending and patents. However, slashing business tax rates may not be the most efficient policy instrument to spur innovation altogether.

Sebastian Findeisen, Paul Schüle, 10 December 2021

New research uses German census data to track the association between success for a child and the earnings of the parent at a much higher level of detail than was previously possible. Sebastian Findeisen and Paul Schüle tell Tim Phillips about the impact of investment in education, intended to improve social mobility.

Read more about the research behind this and download the free discussion paper:

Dodin, M, Findeisen, S, Henkel, L, Sachs, D and Schuele, P. 2021. 'Social Mobility in Germany'. CEPR

Henning Hermes, Philipp Lergetporer, Frauke Peter, Simon Wiederhold, 07 December 2021

In many countries, children from families with lower socioeconomic status are less likely than those from higher socioeconomic status families to attend early childcare programmes. This column presents findings from a field experiment in Germany demonstrating that disadvantaged families have difficulties navigating the complex childcare application process, and providing information and personal assistance for applications can substantially reduce the socioeconomic gap in early childcare enrolment. To promote educational equality, policymakers should alleviate behavioural barriers to childcare and other formally non-selective social programmes.

Désirée Christofzik, Steffen Elstner, Lars Feld, Christoph Schmidt, 22 November 2021

Despite massive digitisation efforts, the German economy has experienced a marked slowdown in productivity growth. This column shows that an important share of this trend reflects the combination of strong labour market performance with the structural shift towards services in the German economy. A large part of the productivity paradox can be resolved by the observation that the notable technological progress in the ICT-producing sector tends to stimulate aggregate employment growth in step with production growth, thereby consuming its effect on aggregate productivity. The results suggest that higher productivity growth should not be the sole policy objective.

Rüdiger Bachmann, Benjamin Born, Olga Goldfayn-Frank, Georgi Kocharkov, Ralph Luetticke, Michael Weber, 20 November 2021

Unconventional fiscal policy acts as a potential stimulus because higher expected future prices should incentivise spending today. This column shows that the temporary reduction in Germany’s value added tax in the second half of 2020 led to a 36% increase in durable spending for individuals with a high perceived price pass-through, along with an increase in semi- and non-durable spending. In total, aggregate consumption spending rose by about €34 billion. Unlike unconventional monetary policy, which often relies on consumer sophistication, the stabilisation success of the temporary VAT cut was partly related to its simplicity.

Rick van der Ploeg, Armon Rezai, Miguel Tovar, 02 November 2021

Carbon pricing disproportionately hurts poorer households, but cash disbursals from the revenue it raises can compensate these households and lower income inequality. This column evaluates the effects of carbon taxes by employing utility-based measures of whether a household is better off. The transparency of such a policy increases political support if a substantial majority of the population benefit from the carbon tax plus cash disbursal. However, endogenous behaviour blunts the effectiveness of such transfers; for Germany, it diminishes political approval from 60% to 30%. Using revenue for lowering income taxes as well for dividends increases popular support back to above 50%.

Alexandra Avdeenko, Onur Eryilmaz, 03 August 2021

Sudden floods across Central Europe have led governments to initiate bailouts, putting decades-old debates on how to respond to future natural disasters back on the policy agenda. Using a representative longitudinal dataset, this column provides evidence that the 2013 floods in Germany reduced willingness to take risks among men living close to the flooded areas, but had no such effect on women. It also finds that affected households were significantly more likely to hold life insurance after the floods. The findings suggest that a portion of the costs associated with natural disasters is likely to be internalised by households at risk, with implications for governments seeking to provide incentives for household-level adaptation measures such as insurance or better building standards. 

Margherita Russo, Claudia Cardinale Ciccotti, Fabrizio De Alexandris, Antonela Gjinaj, Giovanni Romaniello, Antonio Scatorchia, Giorgio Terranova, 02 August 2021

Many countries turned to use contact-tracing apps to help control the spread of COVID-19. Despite public policy efforts, however, tracking apps have not been a success because of public concerns over data privacy. This column compares nine countries to explore the conditions behind the successful use of digital technologies and AI for public purposes. Individuals give over personal data to internet companies but are wary of sharing their data for the public interest. Citizen trust in public interventions and commitment to social goals need to be nurtured in normal times to be effective in emergencies.

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